Hours of Work and the Fair Labor Standards Act: A Study of Retail and Wholesale Trade, 1938-1950

NBER Working Paper No. 6855Issued in December 1998NBER Program(s): LSDAE

I examine the impact of the overtime provisions of the Fair Labor Standards on weekly hours worked between 1938 and 1950 by comparing workers in wholesale trade, a sector which was covered by the Act, with those in retail trade, a sector which was not. I find that the Act reduced hours worked, with a 5 percent reduction in the length of the standard work week reducing by at least 18 percent the proportion of men and women working more than 40 hours per week. I find that employers responded to the overtime provisions of the Act by adjusting straight-time wages, but that this adjustment did not completely offset the overtime provisions. Employers in the south were less able to adjust straight-time wages because the minimum wage provisions of the Act raised wages much more in the south than in the north. The fall in southern hours was therefore greater. Reductions in hours did not translate into increased employment. Although the overtime provisions of the Act may have increased employment in wholesale trade minimum wage provisions of the Act probably reduced it.

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